One out of six cell phone users suffers from “bill shock”

One out of every six mobile phone subscribers has sustained an unexpected …

One out of every six mobile phone users have experienced "bill shock"—an unexpected jump in their monthly service fee that was not prompted by a change in their calling or texting plan. That's 30 million Americans all told, according to a new survey released by the Federal Communications Commission.

These nasty surprises aren't the kind of multi-thousand dollar hikes that have been making headlines in Europe and sometimes here in the United States. "Nevertheless, we know from our consumer call center that for many, many people in this country, a jump of $20 or $30 or $50 on your cell phone bill is a very significant jump," Joel Gurnin, Chair of the FCC's Consumer Task Force told reporters at a Wednesday press conference. "We did find many people who were experiencing bill shock in the range of $50 or $100 or more."

15 percent of these "shocks" cost consumers from $25 to $49 more on their bill, the report says. 14 percent cost from $50 to $99. Another 23 percent cost over $100.

The survey also indicates that half of cell phone users and almost two thirds of home broadband subscribers are lost in the woods when it comes to Early Termination Fees—the price tag for dropping their plan. Bottom line: they often don't know how much their ETF is. In many instances, they don't even know that they have one.

"I think the most striking finding is that so few people know what they are," Gurnin noted.

Did not know

The FCC commissioned Abt/SRBI and Princeton Survey Research Associates to interview 3,005 American adults about these matters from April 19 to May 2, 2010. Among the report's major findings:

17 percent of respondents (one out of every six) said that their cell phone bill suddenly increased, even though they hadn't switched plans.

84 percent of those in the "bill shock" category reported that their mobile service did not contact them, even as they verged on exceeding their call minute, text, or data plan.

88 percent said they received no message from their carrier after the sudden increase.

54 percent of personal cell phone consumers knew that would have to pay an ETF if they quit, but 18 percent disclosed that they did not know about the fee.

21 percent of home broadband customers were aware of an ETF condition attached to their plan, but 38 percent were not.

"Among personal cell phone users who said they were subject to an ETF, 47% did not know what the amount of the fee would be," the study added. "For home broadband users who said they would have to pay an ETF, 64% did not know the amount of the fee."

Major reasons

The survey also suggests that ETFs "may also play a role in consumer behavior" when a subscriber is trying to decide whether to switch plans. 43 percent of respondents who did know about them confided that their ETF represented a "major reason" they stayed with their current carrier. 18 percent said that paying an early fee was a "minor reason" they didn't switch services. Another 34% said the ETF played no role in their decision.

"I think the major take home message from all of this is that people don't know what they should know in order to be able to manage these kind of fees in the best possible way," Gurnin told reporters. "We do know that there are some carriers out there who are beginning to alert their customers when they're heading into bill shock territory. But it is certainly not yet a common practice. We would like to see some of these best practices become universal practices."

Reporters asked the FCC whether all this data would translate into regulations or just attempts to encourage the wireless industry to move into the "best practice" camp.

"We really can't say at this point whether this all will result in a rulemaking or voluntary standards," Gurnin explained. "We have begun some conversations with industry. I think that the importance of this survey is that it gives us a common ground of understanding." And: "We're really confident that we can work in a way that the industry will support that gets out information in a way that is ultimately good for everybody."

Very troubled

Good luck with that, given the wireless industry's response to the report.

"I am very troubled with the current direction the FCC is taking with respect to the wireless industry," Steve Largent of CTIA - The Wireless Association, told us. "It seems the Commission is going to attempt to micromanage what is an incredible array of choices for consumers. From prepaid to postpaid, subsidized handsets to unsubsidized, contracts with ETFs to those without, large, medium or small buckets of minutes and 'all-you-can-use' plans, consumers have an unbelievable range of choices."

"Unfortunately, the Commission's release missed an opportunity to educate consumers," Largent added. "Nowhere mentioned in the documents is there any information for consumers about how they can better manage their wireless usage - information that is readily available from every carrier and that has been submitted to the Commission by CTIA and carriers."

The FCC's materials did come with a tip sheet on dealing with ETFs, but to be fair to CTIA, the trade association may be dealing with "report shock," following the release of the agency's 14th wireless industry competition survey last week. The study very conspicuously noted that over the last five years, concentration in the industry has gone up. The two dominant providers, AT&T and Verizon, now enjoy a 60 percent chunk of revenue and subscribers, "and continue to gain share," the compendium noted. This might result in the FCC pressing some "policy levers" on the wireless industry, the document hinted.

Largent's commentary lamented "the message sent last week in the Mobile Competition Report to today's survey release."

Reporters also asked the FCC whether the agency was going to make any effort to tabulate the size of ETFs and their impact, given AT&T's announcement last Friday that the telco is attaching $325 in early fees to its iPhone.

No go on that, it seems.

"Increases in general . . . I wouldn't want to single out any one company," Gurnin explained. "Different companies adjust their ETFs up or down. It's really an overall issue that we're looking at. Our issue is clarity and disclosure to consumers."

60 Reader Comments

I had this happen in March. My Verizon bill jumped from about $40 to $70. Verizon had accidentally added a data plan to my bill, even though I don't have a smart phone. I just called and asked what's up and they said it was an error and fixed it. Hasn't been an issue since.

The biggest underlying problem for all of this mess is that the costs and the prices of services have become disconnected.

Take the case of equipment subsidies: The price of a new handset is quite a bit less than the actual cost, so the service providers move that cost into the monthly plan, making that price higher than the cost. After the handset is paid for, customers are still required to pay that price, whether or not they want to get another handset. By removing choice from the customers, economic utility is lost.

The same thing applies to various calling plans. I had an experience making international phone calls and getting hit with a $900 bill one month. On a different plan those calls had a price of about $75 (for a monthly fee plus greatly reduced per-minute call). Clearly the price of $900 was way out of line with the actual cost to the provider.

Unless there is some greater good being served (example: first class postage is the same wherever you are mailing in the country -- this subsidizes rural delivery at the expense of urban delivery, but that's serving the greater good of universal access to mail services), economic utility is lost when prices and costs are no longer aligned with each other. Service providers should be allowed to make a profit, but they should make it by allowing customers to choose the actual services they want, and offering them at the cost + a markup, without forcing customers into inefficient bundles or making customers pay for a new handset every two years whether they want one or not.

Now surely that should the CTIA's job, to ensure that customer are happy? Sure the FCC will end up doing the job if the CTIA does not do what it should be doing.

We are too often subject to changing contracts and conditions these days, especially when we have already signed the original. I believe that if a contract rate or terms is changed mid contract, by the cell phone company, then the ETF should be dropped for a grace period, so the customer can terminate the contract in fair terms. The customer should not be forced into a position that is a choice between a rock and a hard place, ie agreeing to terms that aren't 'fair' or having to pay the high ETF.

One out of every six mobile phone users have experienced "bill shock"—an unexpected jump in their monthly service fee that was not prompted by a change in their calling or texting plan.

I've seen this story circulated among numerous sites, yet not a single one offers examples of what sorts of things are responsible for the jump. Using more minutes than the plan provides? Extra text messages? Unexpected data usage? Come on, provide some details here so we can see what are the major contributors.

And of course this whole discussion will be drowned out by the mere mention of ETFs...

Among personal cell phone users who said they were subject to an ETF, 47% did not know what the amount of the fee would be," the study added. "For home broadband users who said they would have to pay an ETF, 64% did not know the amount of the fee.

This might be an issue with methodology. The fact that a customer sitting in a room with some survey administrator can't remember off the top of his head what his ETF is doesn't strike me as worrying. Any reasonably intelligent person would just find out what the ETF is from his provider before deciding to terminate.

Now, if the person doesn't know how to go about finding that information, then we have a problem.

You guys in the U.S. are lucky compared to what we have here in Canada. The costs of cellphone usage and length of contracts are nothing short of outrageous and the consumer has little choice as our telecommunication structure is controlled by a cartel comprising of Rogers, Bell, Shaw and Telus that has carte blanche to charge whatever they want. All they do is play a shell game with services, but in the end you`re paying the same inflated prices regardless of what carrier you choose.

I've switched off my data plan. I finally realized it was not worth around $20-30 monthly, ie 240-360 yearly. I've got a bunch of music, videos and books on my smartphone, and I sync daily from my PC a handful of sites I might want to browse. Thankfully, I'm not into social networking, email can wait, and my pocket map is good enough (though google maps was better). Strangely, the subsidy for my HD2 was higher with a pure voice plan than with a voice+data plan. Cheaper phone, cheaper contract... what's not to like ?

I'm curious to know others take on this: once you cancel a contract and you are billed the ETF, can you choose to pay it out in "chunks", is there anything forcing you to pay it all out in one go? Does managing the ETF in such a way affect your credit rating?

One out of every six mobile phone users have experienced "bill shock"—an unexpected jump in their monthly service fee that was not prompted by a change in their calling or texting plan.

I've seen this story circulated among numerous sites, yet not a single one offers examples of what sorts of things are responsible for the jump. Using more minutes than the plan provides? Extra text messages? Unexpected data usage? Come on, provide some details here so we can see what are the major contributors.

Though it wasn't spelled out explicitly I believe that it's alluded to:

Quote:

84 percent of those in the "bill shock" category reported that their mobile service did not contact them, even as they verged on exceeding their call minute, text, or data plan.

One out of every six mobile phone users have experienced "bill shock"—an unexpected jump in their monthly service fee that was not prompted by a change in their calling or texting plan.

I've seen this story circulated among numerous sites, yet not a single one offers examples of what sorts of things are responsible for the jump. Using more minutes than the plan provides? Extra text messages? Unexpected data usage? Come on, provide some details here so we can see what are the major contributors.

And of course this whole discussion will be drowned out by the mere mention of ETFs...

I have the same question. How many of the respondents had a family plan with a teenage user attached. I think that most adults are pretty cognizant of their limits if they choose to pay for a low minute/restricted usage plan. However, teenagers send something like 3400 text messages a month on average, if a plan does not have unlimited text that could create quite the bill shock. Also, by default all of the for pay add-ons (i.e. ringtones, mobile games, etc.) are not blocked, it could be due to this as well.

I for one have approached the limit on my Verizon plan a few times. Each time I got close I either got a text message or a call from the customer service department asking me to up my plan preemptively to avoid an overage. I know not every carrier does this, but it would be nice if they did.

I got hit by one of those when calling a number I didn't realize was registered in Canada. There really should be some sort of notification that you are calling a different country when you haven't dialed a country code.

I've also noticed that our AT&T bill varies each month from a few cents to a little over a dollar. There are no overage or extra charges, so I haven't been able to track down what they are doing. Frankly, it's ridiculous.

I'm curious to know others take on this: once you cancel a contract and you are billed the ETF, can you choose to pay it out in "chunks", is there anything forcing you to pay it all out in one go? Does managing the ETF in such a way affect your credit rating?

Well, if I canceled my plan tomorrow, there is no way I would pay VZW $350 in one fell swoop. I wouldn't think you could drag the payment out forever, maybe like two or three months.

I have one of those everything plans from Sprint, so there's no usage driven bill shock for me. With my last phone I remember getting texts from Sprint pretty regularly as I was approaching my "spending linit" or about to exceed my minute or text alotment. I don't recall seeing much if any info on my ETF. Making the ETF more visible, say, by putting it on your bill or one click away at your provider's website would be great for us consumers.

I work for one of the major Cell phone providers in america. Sometimes there are billing errors after upgrading a line, or changing a rate plan (we are all human after all) but in the case of just month to month with no changes and then randomly you have a higher bill would have be attributed to customer usage. Sudden increase in calling min, text message overages, maybe even roaming if you were on a grandfathered rate plan that still had traveling limits in america. We also give you the tools to manage your self, weather its through # short codes to send minute or data usage via free sms to your phone, or using our online service to easily view and manage usage.

The statistics that Ars presented does not surprise me, but that most likely is not the fault of the cell provider. I can only speak for myself and what i have witnessed of my coworkers but we strive to make sure that each individual customer is aware of any Contract, ETF, restock fee, etc. Why would we attempt to deceive our customers? If our customer is unhappy with us they will disconnect, if it is prior to the first 30 days there is no ETF and we lost a lot of money on the subsidized price of the handset since we can no longer sell that used phone. If the customer cancels with in the first several months, even with the ETF MAYBE we have broken even and we still have lost money to a competitor and we are not growing our business. Honest is always the best policy, i'm not here to swindle you, i want to provide the best service possible! and a side note....to not know the price of your ETF is understandable as we prorate ours lower with every month of service.

Michaelz wrote:

The same thing applies to various calling plans. I had an experience making international phone calls and getting hit with a $900 bill one month. On a different plan those calls had a price of about $75 (for a monthly fee plus greatly reduced per-minute call). Clearly the price of $900 was way out of line with the actual cost to the provider.

It is important to take responsibility for your own actions, if you are making international calls i am surprised you did not think to call your company and get any info on international rates. Your billing is calculated by a computer based on what rate plan you have, so if your making calls at $3.99 a min to Spain you will have a very high bill. Now we too are human too! if you came to me with a $900 dollar bill i would be happy to work with you and my manager in order to work out some sort of agreement. Your cell provider has no interest in loosing you as a customer.

wangstramedeous wrote:

I'm curious to know others take on this: once you cancel a contract and you are billed the ETF, can you choose to pay it out in "chunks", is there anything forcing you to pay it all out in one go? Does managing the ETF in such a way affect your credit rating?

If you were to cancel a contract after the ETF was applied you could speak with your companies financial services department work out any payment arrangements.

I don't know about the rest of you, but I feel like cell phone companies have done a pretty good job of things so far. I don't really see the need of the government to jump in and start regulating. In my area (which admittedly is a decent sized city) we've got AT&T, Verizon, Sprint, T-Mobile, and Cingular (plus about 5 different pay as you go options) - hardly a lack of diversity. It seems to me that people's main grips are that they don't read their contracts and get angry when that comes back to bite them. I don't see why that's the cellular companies fault.

I've also noticed that our AT&T bill varies each month from a few cents to a little over a dollar. There are no overage or extra charges, so I haven't been able to track down what they are doing. Frankly, it's ridiculous.

Man, can I get your plan? Does in include data? I'm paying waaaaay more than a little over a dollar most months.

When cell phones first arrived on the scene, we were thrilled to be granted the privilege of using one by the big carriers. We paid whatever they asked us to pay. Now the market is more competative and people are turning to prepaid and away from contract because they are sick of being ripped off. I would expect that the carriers are going to have to be a lot more honest in their billing in the future.

I've also noticed that our AT&T bill varies each month from a few cents to a little over a dollar. There are no overage or extra charges, so I haven't been able to track down what they are doing.

I think that's because of the difference in the number of days per month. I see the same thing.

But what's equally vexing when reviewing a phone bill is deciphering all the add-on fees and surcharges. Some might be legitimate taxes that all carriers must impose, but others are instant profit items that sound official but are really something that the billing department fabricated. I would love to see a comprehensive review of all those fees explained and compared across carriers. I suspect it's a 'dirty little secret' that they get away with because it's intentionally too obfuscated for consumers to decode.

I for one have approached the limit on my Verizon plan a few times. Each time I got close I either got a text message or a call from the customer service department asking me to up my plan preemptively to avoid an overage. I know not every carrier does this, but it would be nice if they did.

I think to me the most egregious billing example, bordering on fraudulent in my mind, is not just doing this automatically. Take texting right? On AT&T SMS's are $0.20 each. But I can get an unlimited plan for $20/m. Charging somebody more than $20 for texting is pretty much fraud because they sell unlimited texts for $20. Making all of your customers guess what plan is going to be most cost effective for their usage in the future just so you can capitalize on their mistakes might not be criminal, but it's still a shitty thing to do.

Can you imagine if the power company did this? Ask you to sign up for a fixed number of kWH/month? And if you used less they would just pocket the extra as pure profit? And if you used more they would charge some kind of exorbitant rate? Nobody would stand for it. The cell companies should bill me based on the plan/usage I actually used. If I wanted to gamble, I'd go to Vegas and get better odds.

I don't know about the rest of you, but I feel like cell phone companies have done a pretty good job of things so far. I don't really see the need of the government to jump in and start regulating. In my area (which admittedly is a decent sized city) we've got AT&T, Verizon, Sprint, T-Mobile, and Cingular (plus about 5 different pay as you go options) - hardly a lack of diversity. It seems to me that people's main grips are that they don't read their contracts and get angry when that comes back to bite them. I don't see why that's the cellular companies fault.

I agree with this with one caveat, after your contract period is up and you are no longer paying for the phone "subsidy" your plan should decrease in price if you do not buy a new handset. I understand the need for a ETF (not that I necessarily agree with the amount), but if they are going to claim that this is necessary to cover the loss they would incur from a subsidized phone purchase then they should be consistent and lower the price of the plan when they are no longer paying for the phone.

I've also noticed that our AT&T bill varies each month from a few cents to a little over a dollar. There are no overage or extra charges, so I haven't been able to track down what they are doing.

I think that's because of the difference in the number of days per month. I see the same thing.

But what's equally vexing when reviewing a phone bill is deciphering all the add-on fees and surcharges. Some might be legitimate taxes that all carriers must impose, but others are instant profit items that sound official but are really something that the billing department fabricated. I would love to see a comprehensive review of all those fees explained and compared across carriers. I suspect it's a 'dirty little secret' that they get away with because it's intentionally too obfuscated for consumers to decode.

This is something which has become commonplace. Telco's are really bad, but you see it in other places too. 'Fees' and such which are really just part of the price but somehow they magically leave them out when they advertise the 'price'. Which is, ya know, lying. Flat out. I don't care if it's a cost you bear because of government regulation. It's part of the price. The government forces companies to pay wages instead of hiring slaves, but that doesn't mean it's OK to leave labor costs out of the price and tag it on as a 'fee'. Concert tickets bug me the most. The Ticketmaster/whoever fees sometimes jack up the price of a ticket by as much as 50%. And since there isn't any way to avoid the fees they are effectively part of the ticket price.

3) Users get charged for oddities like incoming international calls. I have no idea how widespread this error is, but it happened to me twice in 2009 to the tune of ~$30 each. Both times I succeeded in getting the charges reversed. Had I been careless with my bill I might have missed the improper charges.

4) User may not be aware of when their 'discounted promotional period' ends. For example, you get a plan that boasts only $69 per month but the fine print says "for the first 180 days" (hypothetically). On day 181, the rate jumps to, say $89, causing frustration.

On AT&T SMS's are $0.20 each. But I can get an unlimited plan for $20/m. Charging somebody more than $20 for texting is pretty much fraud because they sell unlimited texts for $20. Making all of your customers guess what plan is going to be most cost effective for their usage in the future just so you can capitalize on their mistakes might not be criminal, but it's still a shitty thing to do.

If they put a cap at $20, then who would actually get a texting plan? The idea behind the plan is that you know you're a heavy texter so you're paying for the right to use that much more bandwidth then Joe Schmoe who text less than 100 times a month ($0.20 x 100 text = $20). Joe knows that he doesn't text a whole lot so he'll average less then $20/month on individual text charges. I don't see where the issue is.

TheShark wrote:

Can you imagine if the power company did this? Ask you to sign up for a fixed number of kWH/month? And if you used less they would just pocket the extra as pure profit? And if you used more they would charge some kind of exorbitant rate? Nobody would stand for it. The cell companies should bill me based on the plan/usage I actually used.

It's not a fixed number though, it's "unlimited" that means as little or as much as you use. If you want to only pay for what you actually use, then get a "pay as you go" phone.

severusx wrote:

I agree with this with one caveat, after your contract period is up and you are no longer paying for the phone "subsidy" your plan should decrease in price if you do not buy a new handset.

As someone who buys a new phone very 3 - 4 years, I agree. If they claim the bill is a certain amount to make up for the subsidy, then it should drop at the end of the contract.

Here are some theoretical factors that may explain why some of us see rate jumps:

1) Operators refuse to give us an easily-accessible, accurate meter of remaining minutes/text/data, and fail to alert users when they near their base limit. So we trip into "overage fee" territory.

I don't know who your carrier is, but you can dial #min on Verizon to receive a free text message with your current usage. You can also monitor it using the My Account portal on their website. And IIRC they have an app for non-smartphones that will allow you to look at your bill and status right on the phone.

I agree with this with one caveat, after your contract period is up and you are no longer paying for the phone "subsidy" your plan should decrease in price if you do not buy a new handset. I understand the need for a ETF (not that I necessarily agree with the amount), but if they are going to claim that this is necessary to cover the loss they would incur from a subsidized phone purchase then they should be consistent and lower the price of the plan when they are no longer paying for the phone.

Yeah, that's another one. If they broke out the phone more explicitly that would be nice. Basically, they are giving you a loan for the phone, right? So just call it out like that. 'Add a phone to this plan for $5.00/m' or something. The amount or duration might vary depending on the phone. So a smartphone might add $25/m or something but a low-end Nokia flip phone might only add $5.

As to the question of whether the FCC should be looking into this, I think the answer is clearly yes. The fact that there are a whole host of customer-hostile policies which are used universally amongst carriers is IMHO prima facie evidence of some type of collusion. Or at least a market in which competitive forces are failing to work.

I always had my Verizon wireless phone on vibrate. The other day, I happened to turn sound on. I immediately started getting audible notification messages every few seconds. As it turns out, I was getting spammed with text messages. I learned that my text message fees for the month were over $400 (I hadn't noticed since I have a data plan, and always use email, not text). I had to make numerous calls to Verizon over nearly one week. Two customer "service" people who promised to get back to me, never did. Finally, I reached a manager. At first, he admitted that the messages, all of which were from one source, was spam. When I then asked him if he would take it off my bill, he said he couldn't because services were rendered that cost the "Verizon network" money to provide. He retracted that when I pointed out that it's complete BS by demonstrating that I know it costs nothing to send a text message.

NET RESULT: I had to pay Verizon over $200 for a megabyte or two of text messages that they admit are spam. That's $200 of pure profit that Verzon is getting because one of their customers was victimised.

I recently lost my income. My wife is due to give birth to our third child any day now. So, forgive me Lord for feeling this way, but I hope Verizon Wireless is regulated out of existence. Any politician, be they Republican, Democrat or Tea Party, who promises to do that, has my vote. I hope the overpaid and underworked executives at Verizon someday know the fear of thinking that they may not be able to feed their children. Their policy of charging people hundreds of dollars for services that cost them nothing, but they know were fraudulently initiated, MAKES VERIZON WIRELESS A CRIMINAL ENTERPRISE.

If anyone has suggestions of where I can take my complaint (FCC?), please let me know. I know my feelings are ugly, but someone should put the hurt on Verizon Wireless before they screw other people unfortunate enough to have a plan with them. They are thieves.

I had to explain to my mother that she did not have to be under a contract to own and use a cell phone. She would receive a notice that her contract was expiring and hurry to renew it so she didn't lose her service. I'm curious how widespread this misconception is.

(snip)If anyone has suggestions of where I can take my complaint (FCC?), please let me know. I know my feelings are ugly, but someone should put the hurt on Verizon Wireless before they screw other people unfortunate enough to have a plan with them. They are thieves.

Have you tried going to one of their corporate stores (not an Authorized Retailer)? If you are still within the last 30 days or so of this happening, you can ask to have unlimited text added to your plan and have it back dated before the incident occurred. You will then be issued a credit for the overage. I have had this happen (though not that extreme) with my company's corporate plan and this has always been the way that they take care of it.

If they put a cap at $20, then who would actually get a texting plan? The idea behind the plan is that you know you're a heavy texter so you're paying for the right to use that much more bandwidth then Joe Schmoe who text less than 100 times a month ($0.20 x 100 text = $20). Joe knows that he doesn't text a whole lot so he'll average less then $20/month on individual text charges. I don't see where the issue is.

Nobody would get 'plans'. The whole idea of the 'plan' is to screw customers. By making everyone predict their usage in advance the telcos make more money. Lots of people buy more than they need to avoid 'overages'. That's free money for the telco. A few people fail to buy enough and get slammed with charges that can easily be an order of magnitude more than they should be paying. Even more free money free money for the telco. Some people actually correctly predict their usage, but it's not like the telco is losing money on them either. It's fundamentally a crooked system.

Pay-as-you-go is hardly an answer because those just usually get billed at outrageous rates anyway. Most of those just bill SMS's at $0.20 or whatever with no opportunity to get a bulk discount.

Is it really that "disturbing" to send an automated text message to customers when they're close to their plan limits? Try something like "hey, you've used 90% of you minutes/texts/data. Simmer down." You can still be a capitalist and not be a douche bag.

Nobody would get 'plans'. The whole idea of the 'plan' is to screw customers. By making everyone predict their usage in advance the telcos make more money. Lots of people buy more than they need to avoid 'overages'. That's free money for the telco. A few people fail to buy enough and get slammed with charges that can easily be an order of magnitude more than they should be paying. Even more free money free money for the telco. Some people actually correctly predict their usage, but it's not like the telco is losing money on them either. It's fundamentally a crooked system.

It's not a great system, but I think it's the best option out there. Of course it’s setup to maximize profits – they’re a company after all.

TheShark wrote:

Pay-as-you-go is hardly an answer because those just usually get billed at outrageous rates anyway. Most of those just bill SMS's at $0.20 or whatever with no opportunity to get a bulk discount.

So what exactly are you proposing they do? Let you pay as you go, but give you a discount based on how many text you use? In other words - the more of their service you use, the less you pay?

So, forgive me Lord for feeling this way, but I hope Verizon Wireless is regulated out of existence.

You do realize that you're asking for a couple of hundred thousand people to become unemployed too?

Yeah, because if VW went away, those people who where using the service wouldn't go to a competitor, who would then have to hire more employees to handle the increased customers that they would now have.

As far as plans go, I just shopped around for the cheapest unlimited plan available. I pay around $130 (actually around $115 after employer discounts) per month for two lines of smart phone service. We get 1500 weekday landline minutes to share, unlimited calls to any cell phone, unlimited calls after 7pm, unlimited weekends, unlimited data, unlimited text, GPS, nav, etc. I never worry about overages or anything and at about $65 each we pay less than some folks do for individual voice/text plans on other carriers. I think if more people chose their service based on shopping around and doing research then this crap wouldn't fly.

Too many people pick the handset they want and then go to the carrier with that exclusive. This lets too many carriers get away without really having to compete. I always check coverage first. Out of whatever carriers have complete coverage in my area, I pick the one with the lowest plans that give me all the features I want. Once I have chosen my carrier, then I choose my handset. Despite variations and the rapid pace of releases nowadays, it's rarely more than 6 months between major phone releases so there are good options on all major carriers in the US.

The one thing I will say, is that hardly any carriers do the subsidy/ETF thing properly. I get the whole ETF policy. People don't want to pay $500+ for a smart phone so the carrier knocks off $300+ and then signs you to a contract with the assumption that you will repay that over the course of service. In theory, the ETF should equal the total amount of the subsidy and drop by 1/24th over the course of a 2-year contract. Likewise, folks who buy a phone outright or bring their own should have lower monthly rates as they are not paying off a subsidy. As far as I know, T-Mobile is the only major US carrier that offers a lower rate for unsubsidized phones and for this reason I would have chosen them over Sprint if their coverage was better in the areas I frequent. Instead, I just take the subsidy because there is no real financial advantage to not taking it. I pay the same monthly rate either way. Thankfully, most Sprint customers on fancy smart phone plans are "Premier" customers and get a new handset upgrade every year instead of every two. I guess it's their way of getting you to extend your contract long before you have a chance to get out of it but as long as I am happy with the service and don't plan on moving soon, it is nice to get the latest and the greatest every summer for $199 or whatever. Got an Evo with my name on it come next Friday...

Matthew Lasar / Matt writes for Ars Technica about media/technology history, intellectual property, the FCC, or the Internet in general. He teaches United States history and politics at the University of California at Santa Cruz.